Wednesday, July 17, 2013

So a few interesting tweets and blogs set me thinking again about the role of external constraints and political will in achieving social change. The most puzzling feature of the last few years is how a colossal economic policy failure has been able to wreak havoc across the population over a sustained period of time with barely any real change in what elected politicians say and propose to do about the economy. If you read, for example, Paul Mason's neat account of the 2008 meltdown, you will see that it was a common view around that time that the crisis would put an end to the triumphal march of neoliberalism in western democracies and generate significant progressive policy change - as Mason put it, 'the end of the age of greed'. Five years on, I'm still waiting for the age of greed to end, and I'm getting less optimistic by the day. Ed Miliband's talk of predatory capitalism has given way to crude union-bashing, whilst the Tories have exploited the crisis to turn the tables on the poor whilst the bankers get what appears to be a free pass. Elsewhere in Europe things are no better, and in some places worse.

Depressingly, the mainstream left has almost nothing to say about the crisis, its causes, and how we can rebuild a fair economic system. In part, this is because it is still in the grip of third way thinking which sees globalization and the mobility of capital as a constraint which closes off most of the possible measures to redistribute income and protect the welfare state. But is globalization really the reason why more progressive policies can't be followed? There are plenty of reasons for doubting this, as the abundant literature on globaloney attests. Here are a couple of examples.

Richard Murphy describes the likely failure of Iain Duncan Smith's over-hyped Universal Credit to remove disincentives to work for low-earners, and laments the failure to deal with the problem of in-work poverty. His conclusion is that a more progressive tax and benefits system can be achieved with two pre-requisites - political will, and an abandonment of the punitive assumption that the poor prefer not to work. The point here is that although globalization has had important effects on labour markets in advanced economies, there are policies that can significantly mitigate these effects and maintain low levels of inequality, as countries such as the Netherlands and Denmark demonstrate. If we don't adopt such policies, it is nothing to do with globalization, and everything to do with the dominant political ideas that constrain us.

Another example is Hopi Sen's blogging on the housing crisis here. Sen is strangely convinced that there is not much we can do about housing, since it costs money to build houses, and we don't have any. Presumably the elusive bond vigilantes are the reason the money can't be found, but there is good reason for doubting their existence. In fact, housing is one area where globalization barely constrains governments at all. The UK government could perfectly well change tax, land and planning laws to free up the market, and if it doesn't that is nothing at all to do with external constraints. In fact, building new houses in a country with a huge housing shortage and plenty of empty space, as well as an economy running below capacity with large numbers of unemployed building workers, is as close to a free pony as you can get.

So why don't these policies happen? They don't happen because the parties that should push for them - the parties of the progressive left - don't have the will or the capacity to propose and implement them. So instead of worrying about globalization, it's about time we starting worrying about the impact that overblown theories of globalization have had on the thinking of progressive political elites. There is plenty of polling evidence that voters quite like progressive taxation and would be happy to vote for policies restraining the excesses of the banking system or making new housing available. If that doesn't happen, it is because the leadership of the left has given up on making the argument, not because the mysterious forces of international capitalism prevent them from doing it.